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F. No. SD-9/CHART(82)/97-Vl Dated: 22.03.19

Shippine Development Circular No. 0? of 2019

Sub.: Guidelines for erant of licgnce to for.eien flae vessels.

Background, lesal Provisions and Policv:

Whereas Section 405 of Part XIV of the Merchant Shipping Act, 1958 [Control of lndian
ships and ships engaged in Coasting Tradel, mandates that lndian ships and other ships
chartered by lndian citizen or a company or a society, needs to be licensed by the Director
General of Shipping. Such license can be granted subject to such conditions as may be specified
by the Director General of Shipping.
2. Whereas section 407 of the same Part of the Act mandates that ships other than lndian
ships or ships chartered by lndian entities, intending to engage in coastal trade of lndia, need to
be licensed by the Director General of Shipping. Such license can be granted subject to such
conditions as may be specified by the Director General of Shipping.
3. Whereas, in exercise of powers under the above sections of the Act, the Director
General of Shipping has by way of Shipping Development Circular No.-2/2002 dated 08.11.2002
[F.No. SD-9/CHRT (82]1197-lll, issued guidelines for grant of license to foreign flag vessels.
4. Whereas, under the existing licensing conditions under Section 406 and 407 of Merchant
Shipping Act, 1958, the Right of First Refusal (RoFR) is available to lndian flag vessels.
5. Whereas, it is the express policy of the Government of lndia to encourage and promote
manufacture and production of goods in lndia under 'Make in India', with a view to enhance
income and employment. To give effect to this policy, the Department of lndustrial Policy and
Promotion (DIPP) has issued Public Procurement and 'Make in lndia' orders dated 75.6.20]-7
and 28.05.2018.
6. Whereas, Government of lndia has taken several steps to promote shipbuilding in lndia
especially by providing long term subsidy for ship building under the shipbuilding financial
assista nce policy (20L6-2O261.
7. Whereas, Government of lndia intends to further incentivise shipbuilding by providing
additional market access and business support to ships built in lndia.

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S.Whereas,itisfeltthatdemandfortheshipsbuiltinlndiacanbepromotedifthefirst
priorityincharteringofvesselsandforengagingincoastaltrad€'isgiventovesselsbuiltin
ln dia.
g. keeping in view,
whereas, a need has also been felt to review the licensing conditions
(i)theGovernmentoflndia,spolicyofpromotingtheMakeinlndiainitiative,(ii)thePublic
ProcurementandMakeinlndiaordersdated15.6.20lTand2S.05'2018issuedbyDIPP,(iii)the
shipbuilding industry, (iv) the need to
need to give a long term strategic boost to the domestic
encouragethedomesticshippingindustrytosupportthedomesticshipbuildingindustry,and
these vital industries for the
(v) the need to develop self- reliance and a strong synergy among
overall long term development and economic growth of
the country'

l0.Whereas,theNotificationNo.2of,Makeinlndia,dated13.02.19[F.No.SY-
t3lt7l4/2Ot7-SBRl,issuedbytheMinistryofShipping'GoW'oflndia'alsorequiresthereview
of Shipping'
of the guidelines on RoFR issued by the Director General
Section 406 and 407 of the
11. Now therefore in exercise of powers conferred under
Shipping' in supercession of previous
Merchant Shipping Act, 1958, the Director General of
guidelinesrelatingtocharteringandlicensingofthevessels,ispleasedtoissuethefollowing
guidelines, for chartering or engagement of foreign flag vessels'

tvDes of reouirements:-
agents
12.1. The charterer or theentity intending to get the vessel engaged or their authorized
Shipping [DGS]. The application for
shall apply on the portal of the Directorate General of
licence,paymentoffee,it'sprocessingatDGsandgrantoflicensewillbecompletelyonline'
l2.2.Thechartering/engagementofvesselsthrough"tenderprocess"asmentionedaboveshall
by other means shall be
only be applicable for open/global tenders and chartering/engagement
consideredas,,chartering/engagementthroughnon-tenderprocesses,,.The,,tenderprocess,,
shall be considered valid within the following definition:
12.2.l.Tendersshallbeopenorglobaltender'forwhichatenderadvertisementhas
paper or commercial
been duly published in a national or international news
floating the tender;
websites or website of the agency/organization/company
terms and
12.2.2. Tender contains technical specifications and commercial
conditionsofthevesselprovidedinthetenderadvertisement.lfthereisadispute
relatingtotechnicalspecificationsofthevesselgiveninthetenderadvertisement,
themattermaybereferredtoDGSfordecisionastowhetherthelndianvesselwith
a slight difference in specifications should be chartered/engaged' and not
the

foreignflagvessel.Asfaraspracticable,thisdecisionwillbetakenafterdiscussion
with the concerned Parties.

12.3. The following procedure may be followed for the filing of

applications and getting the
licence;

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12.3.1. The entities intending to charter/engaSe the vessel, as well
lndian ship-owners shall get
shall be given the login lD
themselves registered on DGS portal. The person getting registration
shall be permanent.
& password only if he is authorized by these entities. This registration
process, the DGS license shall be
12.3.2. ln case an lndian ship is not selected in the tender
required.TheentityshallfilethedetailsofforeignshipforwhichDGSlicense/permissionis
number at DGS portal' upload the
required, pay fee through Bharat Kosh, fill the transaction
documents along with work order and submit the application'
12.3.3.TheapplicationwillbeprocessedattheDGsandlicensewillbeissuedonline-The
into the system'
respective applicant may download the same after logging
13. Risht of First Refusal:
Rlght of first refusal" is a right which accrues to a
bidder in a tendering process, who offers an
lndianbuiltvesseloranIndianflagvesseloranlndiancharteredvesselandwhoseratethough
notbeingthelowestiswithin2o%otpricequotedbythelowestbidder,subjecttohismatching
ofthelowestrateofferedbyabidderwhooffersaforeignbuiltvessel'Thisrightisconferred
baseduponthepracticesoftheindustry,andthedeliberateintentionofthecentral
of the lndian ship-building industry and
Government towards encouragement and development
the lndian shiPPing industrY'
13.l.Unlessthevesselofferedissuccessfulintheevaluationoftechnicalbid,thebidder
concernedwillnotbeeligibletoexercisetheRightofFirstRefusalunderthiscircular'
through a tender process
13.2. Whenever charter/engagement of vessel is undertaken
required to be
in Paft 12.2, !2.2.L, f2'2'2, the provisions of these guidelines are
specified
incorporated.Whethertheguidelineshavebeenincorporatedinanytenderornot,thesaid
as a part ofthe tender documents'
guidelines would be deemed to have been incorporated
13.3.RoFRwouldbeexercisedonlyincasethevesselbeingofferedforcharterbythelowest
bidder Ll has been built outside lndia'
l3.4.ForanybiddertoexerciseRoFR,hisfinancialbidshouldbewithintheMarginofPurchase
Preference, which will be 20% of L1'
l3.s.ThetwolnstancesunderwhichtheRoFRmaybeexercisedare:
13.5'1'TheLlbidderisaForei8neroranentityregisteredoutsidelndia,offeringaship
not built in lndia.
registered in lndia oR societY
13.5.2. The L1 bidder is a citizen of lndia oR company
registeredinlndiawithavesselregisteredfilaggedinlndiaoroutside,offeringashipnot
built in lndia.
RoFR, the priority to exercise this
13.5.3. From amongst the bidders eligible to exercise
Right would lie in sequence mentioned in the chart
below and in case more than one
bidderisavailableinaparticularcateSory,thenfromthelowesttothehiShestbidder
withinthemarginofpurchasepreference.TheexerciseofRoFRwouldceaseassoonas
aneligiblebidderinorderofprioritymatchesLl.Thefirstprioritywouldbegiventoany
bidder who offers an lndian built ship. ln case none of
the bidders offering lndian built
vesselsmatchestheLlprice,thenRoFRwouldbeofferedtobidderswhoareeither

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 in lndia offering
citizens of lndia or companies registered in lndia or societies registered
avesselregisteredflaggedinlndiaoroutside.lncasenoneofthebidderse|igibleto
exerciseRoFRmatchestheLlquote,thenthechartershallbeawardedtotheLlbidder'
For further clarity regarding priority in exercise of RoFR, the table
below may be
referred to:-

Priority in Country of Bidder is either an lndian citizen OR lndian

RoFR Manufacture company or registered society OR offering an
of ship = lndia lndian flagged shiP.
I Y

7 N

in Para 13'5.1 above, so long as

13.6. lt is clarified that, during the first instance as mentioned
biddershavebidwithinthemarginofpurchasepreference,biddersofferingavesselbuiltin
lndiawouldbegiventhefirstprioritytoexerciseRoFR,eveniftheirbidsarehigherthanthe
bidders falling under the category of second
priority'
13.T.ThebidderwhoexercisesRoFRshouldmeetthecommercialrequirementbymatchingthe
lowest composite Effective Price. lt is further clarified
that there shall be no price preference in
favourofanyvessel.TheCompositeEffectivePriceisthederivedfigurefromthevariousprice
process, wherein all the costs/inputs are
inputs submitted by a bidder/participant in a tender
Price, inputs such as daily hire/daily
summarized. While working out such Composite Effective
rate,mobilization/demobilizationcharges,calloutratesandconversionchargesetc.aretaken
into accou nt.
done without tendering Drocess' for all
14, charterinq or engagement of foreign flaq vessels
tvoes of reouirements:
14.1'Thechartererortheentitiesintendingtogetthevesselcharter/engagedortheir
General of shipping [DGS]' The
authorized agents shall apply on the e-Portal of the Directorate
DGS and grant of license will be
application for licence, payment of fee, its processing at
for the filing of applications and
completely online. The following procedure may be followed
getting the licence;
14.l.l.Theentitiesintendingtocharter/engagethevessel,aswelllndianship.ownersshallget
themselvesregisteredonDGsportal.ThepersongettingregistrationshallbegiventheloginlD
&passwordonlyifheisauthorizedbytheseentities.Thisregistrationshallbepermanent.
vessel shall file the enquiry on
14.1.2. The charterers/entity intending to charter/engage the
DGsportal.Themomenttheypaythefee@Rs.5ooo/.andsubmittheenquiry,ane-mail/sms
shallbesenttoalllndianship.ownersgivinginformationabouttheenquiryfloatedonDGS
portal.
14.l.3.Thelndianship.ownersmayviewtheenquiryandoffertheirshipsthroughDGSportal.

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14.1.4. Both parties may negotiate and finalize the deal. ln case lndian vessel is
chartered/engaged, no license will be required.
14.1.5. ln case an lndian ship is not selected then DGS license shall be required. The entity shall
file the details of foreign ship for which DGS license/permission is required, pay balance fee
through Bharat Kosh and fill the transaction number at DGS portal, upload the documents
alongwith work order and submit the application'
14.1.6. The application will be processed at the DGS and license will be issued online. The
respective applicant may download the same after logging into the system'
15. Pavments of fee for qrant of license/Dermission:
15.1. A non-refundable fee for filing an enquiry shall be paid @ Rs. 5000/-. However, this
amount shall be reduced from the total amount mentioned below, in case the license is
required to be issued. No refund shall be made for enquiry fee even in case license is not
required.
15.2. The applicants shall pay a fee @ Rs. one Lakh, for 30 days license/permission. A minimum
sum of Rs. one Lakh has to be paid for license even if the period of license is less than 30 days.
15.3. After 30 days, fee @ Rs. 5000/- per day shall be paid. However, if applicant wants licence
for full period of 30 days or its multiples then fee shall be paid, as per scale in Para 15.2.
15.4. The fee shall be paid through Bharat Kosh.
15.5. Fee once paid shall not be adjusted or refunded unless sufficient reason is submitted and
accepted by the competent authority.
15.6. The maximum duration of the licence shall not exceed 730 days'
16. Pavment of lew fee for ooeration of vessels in offshore fields:
The foreign vessels which are not classed with IRS and are above 25 years of age shall pay the
levy fee at the following rate:
16.1. Self-propelled Offshore Service Vessels of all descriptions, viz' Anchor Handling Tug, Tug,
Supply Vessels, Support Vessels, etc. shall pay levy fee @ One percentage (1%) of the rate of
charter hire per day in US S multiplied by number of days for which licence/permission is

issued.
15.2. Non-propelled vessels such as Dumb Barges, Pontoons, Non -propelled Accommodation
Barges, Jack-up Rigs etc. shall pay lew fee @ 25% of the amount prescribed under para 16.1
above.
17. All the payments to lndian ships/ship-owners/Bidders will be made, on the basis of the
following exchange rate clause;
17.1. Charter hire / freight / demurrage and all reimbursements/amounts, as payable to lndian
Owners, will be paid in lndian rupees based on mean of TT buying & selling exchange rate of
INR vis-a-vis USD, as declared by SBI (CAG branch), Mumbai, as on due date of payment. lf this
date is a bank holiday, the previous SBI working day on which such exchange rate is available,
will be used for conversion,

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 77 ,2.The para 77,! above is intended to convey and
have crarity on the provisaons on exchange
rate, in case payment is made in rndian Rupees. rt
does not convey that payment is to be made
only in lndian Rupees.
17'3' rt is further crarified that extant RBr & Government
guiderines permit the rndian ship_
owners/Bidders to quote the charter hire in foreign
currency and receive payments of charter
hire in the quoted currency in cases where contracts
have been awarded under rnternationar
competitive Bidding (rcB) tenders and they shafi be
erigible to be paid in quoted currency, even
if they have exercised RoFR.
18. Deplovment of lndian Crew on foreign
flag vessels:
Foreign flag vessels chartered
/engaged for coastal operation shall deploy lndian seafarers
at
the following scale:
18.1. No obligation for employment of lndian
seafarers and trainees up-to 30 days.
18'2' Above 30 days to 90 days: 1/3rd ofthe
seafarers (officers and ratings) as per safe
document or actuar deproyment, whichever manning
is higher, shal be rndian r""frr.r, r,otaing
certificates under MS Act, 1g5g. rhe L50k rnaian
of this 1/3d sha, be trainee cadets/officers
engine or deck side. from
18'3' Above g0 days: 50% of the seafarers
(officers and ratings) as per
safe manning document
or actual deployment, whichever is
higher, shall be lndian seafarers holding
lndian certificates
Act, 1958. The 15% of this 50%
shafi be trainee cadets/officers from
;:::, "t engine or deck
18'4' The lndian seafarers so engaged
shall be distributed equally between
engine side to the possible extent. the navigational and
rndian seafarers which are
obrigatory under this circurar may
.'.t;1,1" be repraced by trainee
trainee cadets can be equary
divided among engine and deck
side to the possibre
"1i;,]t"
18'7'LrVhenever the period of 30 or go days is
not continuous, it sha, be carcurated
on carendar
18.8. The fraction, if any shall
be rounded offto the next higher integer.
19' All statutory certificates
as sr'r'r'rorrrE to
-J appricabre re the
rne vessel
vesser shall
shalr be kept valid during
the license; the period of
20' The vesser sha, compry
wilh tle rures, regurations and guiderines
issued from time to time

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prevention, wreck removal,
salvage, insurancu rna otf,"r
ruqrirements;
sarety, security, po,,ution
21. Penaltv for deviations:
27'7 rf it is noticed that a charterer
has viorated these Guiderines
vessers' the DG shipping in chartering of foreign_frag
after due ve.rification
to penalize the charterer concerned "t,n"1"r"r,r,* sha, take appropriate measures
as he ,,.oy
may uJr)ruer
consider n
such events. necessary to prevent recurrence
of

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 21.2. lf there is a doubt that technicar specifications of the vesser given in the tender
advertisement were drawn up with the deliberate intention of
avoiding lndian built or lndian-
flag vessels, the matter may be referred to the DG shipping for
decision. As far as practicabre,
this decision will be taken after discussion with the concerned parties.
21.3. lf any payment due to rndian entity for the services provided
to any foreign frag vesser or
the foreign entity is not creared on time, the ricense granted to
such vessers or other foreign
flag vessels belonging such entity may be withdrawn, future
apprication may be debarred and
such entities, incruding rndian agencies representing them
may be brack risted.
22. Exceptions in public interest
To expedite national project-imprementation, to increase rndian
tonnage, to encourage
development- of lndian shipping including hub-ports and sea-trade
routes, both new or existing
- and to tackre an emergency or overcome a crisis, in
the interest of rndian shipping or pubric
interest, the DG shipping retains the right to take action
as deemed fit, overriding any of the
guidelines laid down hereinabove.
23' Any Srievance (except on RoFR) arising out of implementation
of these guidelines shall be
referred to the DG shipping, Gol. The grievance on RoFR
arising out of implementation of these
guidelines shall be referred to the Ministry
ofShipping, Govt. of tndia.
24. This circular sharr supersede the shipping Deveropment
circurar 02 of 2ooz, oL of 2004, 02
of 2004, 70 0f 2003, 03 0f 2006, 04 0f 2008, 01 0f 2010, 02
0f 20Lo,06 0f 2010, 07 0f 20t3, 02
ot 2O14, O4 of 2OtS, 02 of 2OL8, and 01 of 2019.
25. This Circular shall come into force with immediate effect.

I
l t-
Yours
-
jdrlrL^ Wil,
(Amitabh Kumar)
Director General of Shipping
To,
l All stakehorders/A,
Cha rterers/shippers/A, rndian shipping
companies, through the
official website of the DGS, Gol.
2. INSA/tCSSA/FOSMA/MASSA/Shipyards Association of tndia/CsL/tSBA/NUSt/MUt/tMF
3. lndian Prlvate ports and Terminals Association.
Copv also fonararded for kind information
to the:
7. PS to Hon',bre Minister of shipping/ps to Hon'ble Minister
of state for shippin& Gor.
2. secretary to the Govt' of rndia, Ministry of
shipping. Transport Bhawan, 1, sansad marg.
New Delhi-110001
3. CEO, NlTt Aayo& New Dethi.
4. Secretary, Department of Defence, South
Block, Ministry of Defence, New Delhi.
5. secretary Department of Defence production,
Ministry of Defence, south Brock,New
Delhi- 110011.
5. secretary Department of rndustriar poricy & promotion,
Udyog Bhawan, NewDerhi-
110011.
7. secretary, Ministry of petroleum and Natural Gas, A-wing, shastri Bhawan, Dr.Rajendra
Prasad Road, New Delhi- 110011.
Secretary, Ministry of chemicals and Fertilizers, A-wing shastri Bhawan, Dr.Rajendra
Prasad Road, New Delhi-110011.
9. secretary, Ministry of steel, Udyog Bhawan, Dr. Maulala Azad Road, New Delhi,110011.
10. secretary, Ministry of Home Affairs, North Block, central secretariat, New Delhi,11ooo1.

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